Owners in financial trouble were never able to flip their houses, mostly because the value of their house fell far below what was owed. I saw, several years ago, that the investor house flipper could stand to make a pretty penny on the glut of foreclosed houses we are now finding. And I was right.
Rock-bottom home prices have finally begun to lure vulture real estate investors into the fray.
Sharon Restrepo, a broker in South Florida, where home prices have dropped nearly 27% over the past 12 months, recently bought a three-family home in Cape Coral from a very motivated seller for a mere $65,000. It listed for $195,000.
She can rent the three apartments out for about $1,500 and turn a profit, while she holds on to the property until the market recovers.
“The savvy investors here,” she said, “are buying up everything they can.”
But, can enough people afford the rent with the shrinking job market?
I also find it rather disingenuous of some of these investor-house-flippers saying that they just want to get people back into houses and that flipping foreclosed homes is about stabilizing the situation.
Econohomes has purchased about 500 of these homes – located primarily in Ohio and Michigan – over the past two years, at an average price of less than $5,000. Ball said he’s bought homes in Cleveland and Detroit for as little as $3,000. They sell for an average of $25,000.
His business has been criticized; usually city officials would prefer the homes be renovated before they’re resold. But Ball said the money spent doing that would make the business unprofitable; nobody would buy at the prices he would have to charge. They would sit vacant and become havens for squatters, looters and drug dealers.
“The most significant thing is to stabilize the situation,” Ball said. “Get people back in the house.” The new owners move in and start taking care of the properties, according to Ball. If that starts to happen in large numbers, these communities may spring back to life.
Let’s get real here. It’s about making a profit. Which leads me to be the first to say, the housing bubble will come back. Lessons were not learned.
